Seeking transparency on interim injunctions

Trends have been unclear. In 2013, the courts accepted only 11 cases involving application for interim injunctions related to IP disputes while they claimed to have granted 77.78% of applications – an inflated grant rate as the courts' Case Filing Division actually rejected to even consider many cases during pre-screening.

Nonetheless, the Shanghai courts granted injunctions in the recent high-profile trade secret cases of Eli Lilly and Novartis, a sign that the new law provides a clearer basis for interim injunctions and raises the level of protection given to trade secrets.

In the Eli Lilly case last year, the Shanghai no 1 People's Court granted interim injunctions prohibiting the defendant Huang from disclosing, using or allowing others to use the alleged trade secret that was contained in the 21 confidential documents he downloaded from the company's system and refused to delete. An interim injunction was also awarded to Novartis against a former employee who stole 879 documents on drug/clinical trial ingredients.

“Before the Civil Procedure Law came into effect, the legal standard was pretty murky and there was disagreement on whether you could ask for injunctions,” said Fang Qi of Fangda Partners. “But the new law made it clear all litigants can ask for them and gave the court more freedom and power in ruling on injunctions,” he added. Qi agreed that while more litigants are expected to apply for interim injunctions, the issue was whether the court will be flexible in granting them, let alone accepting the cases in the first place.

Although interim injunctions have been considered a harsh solution, their benefit is that plaintiffs get an effective remedy at the early stages of a case, as opposed to a regular permanent injunction granted at the end of a case, which can take over a year and possibly be prevented by the infringer.

“What's interesting and what we're hoping from the courts is a more progressive approach in imposing these injunctions where infringement is very obvious, or where a lack of interim injunctions will cause a lot of damage to the plaintiff,” said Jing He of AnJie Law Firm.

The low level of financial compensation has been a key issue in China as litigants claim that it is not a sufficient remedy. There is no adequate remedy for defamation or trade secret disclosure as the plaintiff's reputation or potentially valuable information is lost, regardless of damages or even injunction rulings against the defendant.

The Nanjing court has been in debate over how interim injunctions will be granted and effective in trade secret cases – judges at a seminar last month announced that they would look at the issue more closely.

“The court doesn't grant enough interim injunctions right to such cases right now, which is why we're so excited to see cases like Eli Lilly and Novartis,” He continued.

Qi noted there were signs that the SPC is leaning towards granting more: “The courts are not hesitant to grant injunctions if all legal requirements are satisfied, and apparently they've even asked the lower courts to lower the legal standards.”

“From litigators' perspectives, we are going in the right direction,” he said.

By Katherine Jo